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. Last Updated: 07/27/2016

Moscow Fuel Supply Set for Summer

Unlike last year, Moscow will not suffer from gasoline shortages this summer, and prices are not expected to change drastically, the Central Fuel Co., which controls about 60 percent of the capital's gasoline market, said Wednesday.

"Our reserves for the spring and summer are now four times larger than last year," CFC president Yury Shafranik told a news conference.

Prices will remain stable providing there are no economic crises such as a surprise currency devaluation or a sharp drop in world oil prices, Shafranik said. "If the oil price drops radically there will be a crisis equal to Aug. 17," he said, referring to the financial chaos that erupted after the government devalued the ruble on Aug. 17, 1998.

CFC, created three years ago by the Moscow city government to organize steady supplies to the city's gas stations, came under fire last summer when severe fuel shortages lead to long lines at city gas stations. Citing the shortage, CFC hiked gasoline prices by 15 percent.

Shafranik also said CFC is continuing to expand and is acquiring 130 filling stations in Moscow from the MOST-Oil company, the gasoline distribution branch of media tycoon Vladimir Gussinsky's MOST empire. Ninety of the stations will be transferred to CFC by May, he said. With the acquisition, the CFC will have about 230 gas stations in Moscow and the Moscow region.

But Shafranik assured reporters that CFC is not trying to get a monopoly on the Moscow gasoline market, which accounts for 12 percent to 13 percent of the country's total gasoline retail sector.

"Of course tiny retail companies will probably disappear, but there is a healthy balance on the market now with few a large players," he said. "This should not change."

CFC is unique in that it is one of the few companies in Russia that does not produce oil itself, but works on the downstream side of the industry in refining and distribution. CFC's main crude suppliers are Russia's No. 1 oil company LUKoil and Tatneft.

Last year the company refined 9 million metric tons of crude at its Moscow refinery, or 67 percent of refinery's maximum throughput, Shafranik said. Total revenues for 1999 came to 931 million rubles, or $39 million.

CFC is owned by Moscow Oil Co., which was set up by Moscow Mayor Yury Luzhkov in February 1999 and is controlled by the city government.

City Hall has ambitious plans for MOC and see it expanding into a full-fledged company with its own production units in Western Siberia. Shafranik said that MOC will need to sink about $1 billion into exploration and production over next five to seven years in order to secure a yearly rate of production of 5 million tons of crude oil. He did not say how the project would be financed.